Higher expenses hit Jean Coutu's profit

Quebec-based pharmacy company Jean Coutu Group says its third-quarter profit fell 10 per cent from a year earlier as increased stock-based and operating expenses offset sales growth.

The company's net income was $56 million, down from $62.5 million, while net profit per share was flat at 30 cents.

The profit fell two cents short of analyst estimates of 32 cents per share, while revenue was above the consensus, according to data from Thomson Reuters.

The company said the appreciation of Coutu's stock value had increased compensation-related share-based expenses to $4.4 million in the quarter, which was $4 million higher than a year before. It also said general and operating expenses were higher, primarily because of some stores in the startup phase.

Coutu's A shares were worth $27 when the third quarter ended, up from $18.26 a year earlier. The shares closed Wednesday at $27.38, prior to the earnings announcement.

Revenue for the quarter ended Nov. 29 was up 3.4 per cent from the third quarter of fiscal 2014, rising to $736.7 million from $712.5 million, due to overall market growth and the expansion of Coutu's network of franchised stores.

On a same-store basis comparing locations open for more than a year, the network's retail sales were up 3.1 per cent overall with pharmacy sales up 3.8 per cent and front-end sales up 2.0 per cent.